Perspectives
November 05, 2020

All Roads Lead Home at Optigo 2020

Deborah Jenkins
By
Deborah Jenkins, EVP Head of Multifamily Business

Like everything else this year, we did things a little differently for our Optigo 2020 conference. Instead of traveling to Austin as planned, our lender and investor networks joined the Freddie Mac team online for the three-day event. All told, more than 1,800 tuned in.

Although we couldn’t be together, our interactive online platform helped us feel more connected. As usual, the event was the perfect opportunity to talk about the year we’ve had and look forward to the year ahead. 

As I mentioned in my opening remarks, we should all be proud of how our entire industry stepped up to lead and overcome the difficulties created by COVID-19. The pandemic created new business obstacles that few could have predicted. We had to rethink property inspections and appraisals. Even the logistics of signatures and document delivery were put to the test as we shifted an entire industry to remote work overnight.

What we experienced this year represents one of the greatest challenges the multifamily industry has ever faced. It was national in scope, hitting every market all at once, and it uniquely affected multifamily housing and renters.

There was no playbook for this moment, but that’s why Freddie Mac exists. Together with our Optigo® network, we fulfilled our mission providing stability, liquidity and affordability when rental housing finance needed it most.

We quickly developed a risk-based approach to ensure a consistent flow of capital. As we detailed in the conference’s production and underwriting breakout session, our efforts enabled countless borrowers to take advantage of historically low Treasury rates to strengthen their balance sheets and provide housing for our nation’s workforce.

As we learned, the rate environment wasn’t just a springboard for a refinance boom – it was also evidence of enormous economic uncertainty. The downturn has been devastating to working and middle-income families across the country – many of whom are renters. As we know, when renters cannot pay their rent through no fault of their own, operators struggle to meet their obligations too.

In response, we stood up an unprecedented nationwide forbearance program along with new tools for renters, extending flexibility to our borrowers who needed time to adjust and incorporating tenant protections in return. Our conference session on loan performance and forbearance underscored the success of this effort in granular detail.

The crisis also provided a test of our industry-leading credit risk transfer platform. Even through the highest levels of spread widening and volatility during March and April, our model proved its durability. As our Capital Markets and Investor Relations teams explained, we continued to price and execute on our K-Deals®, with relatively little Fed intervention. After more than a decade of success, the K-deal® brand and the depth of our investor base saw us through.

Responding to all the challenges of 2020 also required technological innovation. Our Optigo to the Future panel covered the creation of the myOptigo platform, which will soon serve as a single-entry point for lenders. We’re providing more transparency to the loan process and quickly delivering solutions in the credit assessment space. We also reimagined investor reporting with myOptigo, improving the process for review and reconciliation of loans in the securitization process. And we took virtual inspections to the next level, demonstrating their viability as an industry standard.

We’re going to continue to build on this work – our goal is to lead the industry not only during the pandemic but beyond as well.

In the background of all this, we seamlessly led the market through the LIBOR to SOFR transition, executing the industry’s first SOFR-based floating-rate loan. We were also the first to issue a SOFR-based bond transaction, which was recognized by Global Capital as the CMBS Deal of the Year.

Perhaps most importantly, another major theme at Optigo 2020 was an exploration of how we might encourage more equity, inclusion and diversity throughout the multifamily industry.  As an industry leader, we have the platform to make a statement and affect real change and that’s what we intend to do. At Freddie Mac, we have long strived to meet this goal, but this moment in history calls on all of us to do more. This effort is a top priority in the year ahead.

All told, this has been a year of challenges, but cast in a different light, it has also been an opportunity to see what we are made of, what we stand for and show that we can rise to the occasion. By all accounts, as an industry and as a company, we’ve succeeded.

Thank you to all those who were able to join us for the conference. Together, our Optigo network continues to demonstrate that, regardless of the path, all roads lead home.